Banks Set a New Record
US banks have set a new record, but not one to boast about. New reports show that more banks failed to stay open in 2010 than any other year except 1992. The last time banks failed was due to the national loan crisis but this year many banks fell victim to the current recession. 2010 saw a record number of 157 banks closing which is higher than the 140 banks that closed the previous year. This is of major concern, especially for FDIC, the insurance body of the banks. FDIC however has confirmed that, even through they are in the red, they still have enough funding to cover failures until 2014.
An estimated 20% of all banks on the closure watch list ends up closing each year.
The economy is slowly pulling out of recession and larger banks including Bank of America Corporation (NYSE:BAC) are reporting a better than expected year. This can not be said for smaller banks, as high unemployment and other economic situation have forced them to close. Analysts believe that the worst is over and 2011 will see fewer closures, but this can not be guaranteed. Until the country pulls out of the current recession, the future of financial institutions is still being watched with a close eye.
